Daily Brief Financials: First Pacific Co, HDFC Bank, Bank Of Queensland, Grupo Catalana Occidente Sa, Bitcoin, Close Brothers, China Vanke , Hargreaves Lansdown, OSB Group and more

• First Pacific Co (142 HK)‘s 49.9%-held MPIC is spinning off Maynilad, a distributor of potable water and provider of sewage services, on the Philippine exchange.
• The IPO has been priced at PHP 15/share, down 25% from earlier expectations. Proceeds may reach PHP 34bn (~US$580mn), in the largest Filipino IPO since 2021. 
• First Pac’s NAV discount has drifted off a recent multi-year narrowing, but remains elevated for a multiple cross-border, difficult to short holdco.

• Despite good earnings results, HDFC Bank (HDFCB IN) does not seem to be going anywhere. The stock did rally for the past 3 weeks but after the earnings stayed flat.
• Our quantitative probabilistic model indicates HDFC Bank usually does not rally for more than 4 weeks when this pattern is encountered (we are in the 4th week, this week). 
• From a price perspective, our model shows a mildly overbought stock, confirming the slow pace. The pullback should be short-lived (1-2 weeks), but it’s imminent.

• Context: The Bank Of Queensland (BOQ AU) vs. Commonwealth Bank (CBA AU) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
• Highlights: Long Bank Of Queensland (BOQ AU) vs. short CBA (CBA AU) targets a 4% return.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Modest sweetener, same outcome: Inocsa raises its GCO offer to €49.75 (+€0.75/share) after strong sector performance, ensuring fairness optics but still below intrinsic value and peer valuations.
• Timeline drift, limited spread: Seven-month process extended by repeated dividend-driven adjustments; expected settlement in early Jan-2026, offering ~1% gross spread and ~4.9% annualized return for arbitrageurs.
• Delisting inevitable: With 62% control and minimal regulatory risk, Inocsa’s bid remains near-certain; minority shareholders face diminishing upside and liquidity risk once Catalana Occidente exits the exchange.

• Fully Diluted Valuation (FDV) and Market Capitalisation (MC), while subject to various externalities, are often used as reference points for token valuation. However, this approach is ambiguous for early-stage tokens: Small circulating floats and speculative momentum often inflate FDV, creating uncertainty over whether to benchmark against peers’ FDV or to adjust for differences in circulating supply.
• We analysed over 800 tokens, regressing circulating supply (%CS) against both Fully Diluted Valuation (FDV) and Market Capitalisation (MC), with results segmented by project maturity and time.
• Main finding: Throughout most of a token’s life, MC explains valuation behaviour more reliably than FDV. The market anchors on circulating supply rather than total theoretical value.

• Close Brothers is a UK-based merchant banking group with a focus on specialist lending, securities trading, and formerly, wealth management. The company’s performance is currently overshadowed by the Financial Conduct Authority’s (FCA) investigation into historical motor finance commissions, which has led to a suspension of dividends and significant financial provisions.
• The core banking business remains resilient, characterized by a prudent lending approach, strong margins, and deep expertise in niche markets. However, the uncertainty surrounding the FCA review presents a material risk to short-to-medium term earnings and capital.
• Management is taking decisive action to bolster the balance sheet, including the sale of its Asset Management division and a focus on cost discipline. The long-term viability will depend on the final outcome of the regulatory review and the bank’s ability to navigate the evolving economic and regulatory landscape.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: China Vanke, Japfa Comfeed, New World Development, Softbank Group
• UST yields declined yesterday, with the curve bull-flattening for the second day. The yield on the 2Y UST was stable at 3.46%, while the yield on the 10Y UST fell 2 bps to 3.96%.
• Equities halted a two-day rally, while gold and silver retreated from near record-high levels. The S&P 500 was unchanged at 6,735, while the Nasdaq declined 0.2% to 22,954.

• Impending Private Equity Takeover: Hargreaves Lansdown‘s board has recommended a £5.4bn cash offer from a private equity consortium, signaling a shift from public to private ownership. This move is expected to accelerate the company’s strategic transformation outside the glare of public markets but introduces uncertainty for existing public shareholders.
• Market Leader Facing Headwinds: As the UK’s largest retail investment platform with a dominant market share and record Assets under Administration (AUA) of £155.3bn, HL boasts significant scale. However, it faces challenges from intense competition, pressure on fees, declining client retention rates, and the need for significant technology investment to maintain its edge.
• Robust Financials Tempered by Rising Costs: The company has demonstrated strong revenue growth, particularly benefiting from higher interest rates on client cash. However, profitability has been impacted by rising costs associated with strategic investments in technology and a shift towards lower-margin products, a trend that is expected to continue as it evolves its business model.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• OSB Group is a leading specialist mortgage lender in the UK, focusing on underserved segments of the market such as professional Buy-to-Let and specialist residential mortgages. This specialization allows for potentially higher margins and a degree of insulation from the intense competition in the mainstream mortgage market.
• The company operates a diversified and stable funding model, primarily relying on retail deposits from its Kent Reliance and Charter Savings Bank brands. This is supplemented by access to wholesale funding through securitization platforms and Bank of England schemes, providing financial flexibility.
• Recent financial performance indicates resilience, with underlying pre-tax profit growth in 2024. However, the company faces headwinds from a subdued UK mortgage market and rising cost-to-income ratios. Future growth is expected to be driven by the expanding specialist lending market, fueled by changing employment and living patterns.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.